Benitez family refutes STI claim of resignation, challenging declaration of default

19 December 2014

MR. EUSEBIO H. TANCO
ATTY. MONICO V. JACOB
MS. MARIA VANESSA L. TANCO
MR. MARTIN TANCO
MR. JOSEPH AGUSTIN L. TANCO
MS. YOLANDA M. BAUTISTA

STI Education Systems Holdings, Inc.
7th Floor, iACADEMY building
6764 Ayala Avenue, Makati City 1226

Gentlemen:

We refer to your letter dated 12 December 2014 calling for a membership meeting of the Philippine Women’s University (PWU) on 22 December 2014. We respectfully submit that there is no occasion to call for a members’ meeting to implement the agenda items mentioned in said letter.

As indicated in your own letter, the matters you want the members to act upon during the meeting arise from a default of PWU under the terms of the BDO Loan. However, there is no default of the BDO Loan to speak of at this time. The Joint Venture Agreement dated November 16, 2011 states:

“3.5 Repayment of the EHT Loan to PWU

All other terms and conditions of the BDO Loan to PWU shall be suspended and no payment shall be required to service the principal amount and interest thereon. However, interest shall accrue on the EHT Loan to PWU.

All the terms and conditions of the BDO Loan, including those on repayment of the principal and interest, shall however be automatically restored and made applicable to the EHT Loan to PWU if within the six (6) month period commencing from the date EHT acquires the BDO Loan, PWU has not complied with all of the following:

Execution of deed(s) of assignment, for the transfer by PWU of the PWU Indiana Property and PWU Taft Property in favor of the Joint Venture Company through a Property for Share Swap Transaction under tax free exchange pursuant to Section 40 (c)(2)(c) of the Tax Reform Act of 1997, as amended;

Filing of an application with the BIR for a ruling that the Property for Share Swap Transaction between PWU and the Joint Venture Company is a tax free exchange pursuant to Section 40 (c)(2)(c) of the Tax Reform Act of 1997, as amended, and;

Filing of all documentary requirements with the SEC for the amendment of the Articles of Incorporation and By-Laws of PWU and the Joint Venture Company as provided for in Sections 6.2(e) and 7.2.1(d) of the Agreement.” (emphasis supplied)

The above provision states that the terms and conditions of the BDO Loan shall be automatically restored and made applicable to the same in the event of non-compliance by PWU with the terms under Section 3.5 (b)(i), (ii) and (iii). Necessarily, the maturity dates stipulated under the terms and conditions of the BDO Loan will apply before there can be any occasion for default.

Even assuming there was a valid demand made on PWU, the terms and conditions of the BDO Loan were suspended from the effectivity of the Joint Venture Agreement beginning on 16 November 2011 up until the alleged demand on PWU on 9 December 2014. Further, interests on the loans given to PWU were waived. The BDO Loan calls for periodic payments. These periodic payments were consequently suspended until the BDO Loan terms and conditions are restored. Thus, unless a valid demand for payment of a periodic payment is made and not met by PWU, there is no default to speak of at the moment.

We also hereby confirm that we have not resigned as members or trustees of PWU.

Thank you for your kind consideration.

HELENA Z BENITEZ JOSE FRANCISCO B. BENITEZ

JOSE CONRADO B. BENITEZ CONRADO BENITEZ II

ALFREDO JOSE B. REYES AMELIA LOURDES B. REYES

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